Felcra’s members are asking the MACC to investigate… themselves? Here’s what happened

In 1997, the government established Felcra, or the Federal Land Consolidation and Rehabilitation Authority, wanted to help develop economic activity and living standards in rural areas. Basically, Felcra would help people in rural areas manage their land in return for a 6.5% management fee; and soon found itself involved in various industries like agriculture, businesses, estate management, and livestock.

Then, 18 years later in 2015, the government announced plans for Malaysia to be Asia’s biggest biogas exporter by 2020. Biogas is a fancy word for methane and carbon dioxide produced via natural decomposition of organic matter, which is a fancy word for the gas that smells like fart. It’s also a huge deal because many considered biogas to be a form of renewable energy that was estimated to grow from a RM1.46 billion industry in 2015 to RM8.3 billion by 2022. 

“The aim is to show the viability in upgrading biogas from palm oil mill effluent (POME) to bio-methane, which can be used to fuel cars or other industrial applications.” – then Science, Technology and Innovation Minister Ewon Ebin, as reported by Borneo Post in 2015

And Felcra wanted a piece of this (potentially) 8.3 billion Ringgit pie.  

But Felcra had no experience in biogas

Compared to managing rural industries like agriculture and livestock, biogas was something completely new to Felcra. So rather than hiring a whole bunch of people experienced in biogas, they did what any company would do – they got into a deal with another company that already had the expertise.

This company was called Megagreen, a company that was incorporated in 2014 and its line of business is in the manufacture of renewable energy to generate power from treatment of palm oil by-products.

The deal was for Megagreen to lease land from Felcra to “develop, finance, construct, commission, own, operate and manage directly” biogas plants. And because Felca was already involved in agriculture and livestock, the by-products from their settlers can be used by the plants Megagreen would soon develop. It was a win-win situation.

So, in 2015, the deal between Felcra and Megagreen was officially struck to construct biogas plants that are capable of producing six megawatts each on its existing palm oil mills in these areas:

• Bukit Kepong (Johor)
• Sungai Melikai (Johor)
• Nasaruddin (Perak)
• Seberang Perak (Perak)
• Maran (Pahang)

So Felca became a guarantor for Megagreen’s RM35.25 million loan to finance the construction, and, in March 2017, completed Phase 1 construction of three power plants in Perak. Then, in June 2017, Megagreen completed Phase 2 construction of two powerplants in Pahang and Johor.

And then…

All the projects were abandoned

On a recent site visit at the Nasaruddin site in Perak by Malaysiakini revealed that the biogas plants are not operational at all. There is even a signboard at the Nasaruddin site that claims completion in May 2016.

In the compound, components of a biogas plant can be found, including a flare tower, anaerobic ponds, and a turbine stored in a container. One of the guards even said that there is no way to process biogas because of a missing key component: a biogas scrubber. A biogas scrubber basically treats wastewater or chemical liquids to get rid of chemicals and avoid contamination in the by-product.

This is the same with the Seberang Perak site, comprising of dilapidated components, no signboard, alongside unkempt grounds teeming with weeds, zinc, and black sheets.

Essentially, it can safely be surmised that the sites are seemingly abandoned…for now,

So, just last week, Felcra settlers and participants are calling the corporation out for answers.

Instead of benefiting from the biogas projects as promised, the incomplete status of these plants have the settlers concerned that they are actually losing money.

Not only are the plants non-operational at their current stage, the loan that Megagreen took out with Felcra named as the guarantor has yet to be paid out, which, according to the Felcra settlers, has put a strain on Felcra’s finances. They are worried that Felcra management could be using their money to pay out the loans instead.

Furthermore, the settlers are of the opinion that Felcra’s involvement in these projects has deviated away from Felcra’s goal and is a sign of abuse of power from a conflict of interest.

And this conflict of interest is because…

There was a hidden third party involved in the deal

So, quick refresh. Here are the parties involved in the biogas deal:

1. Felcra
2. Megagreen
3. and….

Yup. Bung Mokhtar. You may know him as the guy who’s made some of the most controversial remarks in the Malaysian political landscape, including singing praises to Hitler and calling Karpal Singh a monkey in parliament. So how does he fit in with this whole Felcra debacle? He fit in a bit too well, actually:

• Bung Mokhtar was the chairman of Felcra
• Bung Mokhtar was a director at Megagreen
• Bung Mokhtar named Felcra as a guarantor for Megagreen’s RM35.25m loan

If this doesn’t immediately set off alarm bells, let us explain the scenario in a different context – You and Johnny were shortlisted to win a scholarship at a school essay writing competition. Only one judge makes the final decision on whether you or Johnny wins the scholarship. The judge is also Johnny’s mother. 

This is what’s referred to as a conflict of interest, and the fact that Bung had his hand in both sides of the pie is the conflict of interest that has the settlers so concerned.

To the settlers, the mismanagement of Felcra under Bung’s leadership, including the sanctioning of the projects, is one of the reasons why the once cash-rich Felcra has become cash-strapped.

“I don’t want Felcra to become a victim of embezzlement and abuse of power. We need to return Felcra to its core business.” – Felcra rep Rameli Buyong, as reported by Malaysiakini

Therefore, to call for some sort of action from the responsible parties, the settlers and participants had complained to the Malaysian Anti-Corruption Commission (MACC) and Felcra management earlier this year.

But there may be some hope for Felca’s settlers

On 4th of December, 2019, MACC promised that the anti-corruption body is looking into Bung Mokhtar’s involvement in the projects, and have already interviewed 13 individuals over the matter.

Felcra management also said that work is ongoing with the two plants in Perak, and it estimated completion by first quarter of 2020, as Megagreen is also no longer leading the projects, and now Serba Dinamik Holdings, an oil and gas solution provider, had taken over.

In addition, Felcra CEO Mohd Nazrul Izam Mansor promised that no government or Felcra funds had been used to pay out the loan, insisting that only Megagreen is responsible for payments.

Nevertheless, it should be noted that Nazrul did not mention anything about the incomplete biogas plants in Johor and Pahang. And the contracts did not explicitly state a deadline for the completion of the biogas plants. So, whether Felcra and the new contractor can keep their promises depends on whether or not you believe that the grass is megagreener on the other side.